Will auto enrollment help in funding employee retirement? Thejury is still out, with studies indicating that there’s more to theissue than meets the eye.

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Previously we looked at scholarly research from the Center forRetirement Research at Boston College, which found that olderworkers who were auto enrolled in their retirementplans tended not to contribute as much to the plans asworkers who had had to enroll themselves.

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But research from Bank of America Merrill Lynch comes downheavily on the other side of the issue, saying that a secondarybenefit of auto enrollment is that participants boost theircontributions on their own: “In 2014, 46% of automatically enrolledparticipants voluntarily increased their contribution rates. In2011, the figure was only 25%,” the research said.

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There’s no question that more workers participate under an autoenrollment feature than under a plan that has no such provision.The BAML research found that, among the firm’s clients, plans withautomatic enrollment had 32 percent higher average participationrates than plans that do not automatically enroll employees.

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BAML also found that, year over year, there was an 8 percentincrease in plans using auto enrollment, a 25 percent increase inplans that combined auto enrollment with auto increases and a 49percent increase in plans that offer a standalone auto increasefrom 2013 to 2014.

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The BAML research said, “Average contributions increasedramatically for participants who are automatically enrolled. Everyyear since 2009, contributions for automatically enrolledparticipants have increased.” It added that in 2010, 25 percent ofauto-enrolled participants voluntarily increased theircontributions, while in 2012–2013, 41 percent did so.

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However, in a footnote, the paper also said that “dramaticincrease” in average contributions “[i]ncludes both employer andemployee contributions for participants who are automaticallyenrolled within that year.” So the increase is not solely due toparticipant actions.

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The CRR study specifically looked at older workers, while theBAML research did not. When that’s considered, those on both sidesof the argument could be correct, depending on the segment of theemployee population being discussed. Regardless, it’s clear thatadditional data would be helpful in determining just how much autoenrollment benefits participants.

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